Tips on Initiative 77

Why I voted yes on the season’s most contentious issue

Published in

730DC

7 min readJun 19, 2018

Ballot initiatives are a legacy of the original Progressives, and this Tuesday, Washington has an opportunity to make a progressive choice on a ballot initiative by voting yes on 77.

I didn’t come to this decision lightly. As you might notice, I’m publishing this pretty late, in part because I’m away at my sister’s graduation, but also because this is a thorny, many-sided beast of an issue. Several bartender friends made clear that they thought this was a horrible idea, and I respect their experience.

But I also heard from many other friends who’d worked service industry jobs where they experienced the problems Initiative 77 is meant to alleviate. These experiences, along with my research, are why I voted yes.

Why do advocates think this is a good idea?

If employers are already required to make sure that take-home pay meets minimum wage, why change things? There are two main reasons.

One is that the current set-up makes it too easy for employers to dodge their responsibility. Tips come in cash; you can imagine it might be easy to fudge records. The Department of Labor found that 84 percent of the restaurants it investigated between 2010 and 2014 violated regulations, including tip theft — a big reason the NYT op-ed board came out in favor of eliminating the tipped minimum.

Opinion | Wage Theft in Restaurants

New York could soon join seven other states that have done away with the unjust policy of letting employers pay…

www.nytimes.com

When opponents of Initiative 77 have responded to this, they’ve made a two-tiered argument: First, that tip theft and other abuses don’t exist. That’s rich, considering that the chair of the Save Our Tips coalition is head of Clyde’s Restaurant Group, which in 2010 was sued by three employees for failing to pay minimum wage. (They settled and agreed to pay all back wages that were due.)

Second, that if they do, the proper response should be better enforcement, not a reformed law. But two-tiered systems are notoriously difficult to implement, and those most susceptible to abuse are never going to have the legal resources that restaurant owners and employers have. It just isn’t a fair fight if you put the onus on employees. Why not just make compliance the default?

The second main reason advocates support One Fair Wage is that they say it will raise wages. The empirical evidence for this is solid. Here’s an excerpt from TalkPoverty:

Research shows that the eight states without a tipped minimum wage have higher average earnings and lower poverty rates among tipped workers, without hurting their employment rates. Specifically, in equal treatment states, tipped workers’ median earnings are 14 percent higher and the growth of restaurants and restaurant employment is more robust compared with states that use the federal minimum tipped wage of $2.13 per hour. Research also suggests that abolishing the tipped minimum wage may be particularly advantageous for women, as the average wage gap for women tipped workers in equal treatment states is one-third smaller than the wage gap for women tipped workers in states that maintain the federal tipped minimum wage.

The rebuttal from Initiative 77 is right there in their slogan: “Save Our Tips.” They’ve consistently repeated the idea that eliminating the tipped minimum means eliminating tips. And without tips, even the minimum wage isn’t enough.

Part of this revolves around an argument out of Econ 101: If prices go up, goes the logic, diners — on their scarce budgets — will tip less.

It’s a just-so story. The reality is that there is no evidence that this is the case. Think about it: If you’ve visited California recently, no one is telling you as you pick up the check, “Oh yeah, you don’t need to tip here.” Social norms are the most important factor in tipping behavior, and tipping is ingrained in our culture. That’s borne out where One Fair Wage is already policy, reports the Post, “Restaurateurs in [One Fair Wage] states, as well as researchers, say diners continue to tip despite higher menu prices designed to cover the increased labor costs.”

From another Post article: ““Servers that fear tipping will go away, that’s a misplaced fear,” said Michael Lynn, a professor at the Cornell University School of Hotel Administration who researches tipping.”

(This is going out on a limb, but if diners continue to tip at the same percentage, total tips will go up, not down.)

However, advocates’ core argument is about raising the floor from which tipped workers build their wages. $3 plus tips is working for those employees who are saying “no” to 77, but others are struggling. DCist did some great journalism by investigating the non-restaurant workers affected by 77, including nail technicians and delivery drivers. “You cannot survive as a delivery person with a family to support,” said one driver who reported that tips didn’t always make up the difference between his $4 base pay and the DC minimum wage.

This gets at one of the most common, often-minimized, issues with the current setup: Employees are often asked to overlook bad shifts — the Tuesday lunches — because they’ll make so much on the good shifts — the Friday evening. (This also leaves employees at the mercy of their bosses in terms of scheduling.) They may make a minimum wage averaged out over all their hours, but not the minimum wage in each specific hour they work.

Finally, there are good reasons why tipping should be phased out. As discussed below, Initiative 77 won’t “ban” or make tips disappear — but maybe it should. The tipped minimum has racist origins and

Will the sky fall on the restaurant industry?

I want to finish by briefly addressing some of the arguments made by opponents of 77.

“Where are the workers who support 77?” Advocates have presented plenty of workers who support 77, but it’s understandable that they wouldn’t be coming out in droves when their bosses in an at-will state are putting up “Save Our Tips” signs in their windows. (The ThinkProgress story, in particular, gets at pressure some employees have received.)

Moreover, it stands to reason that the people who this law will most likely benefit are those with the least ability to organize. Justin Zelikovitz, attorney at DC Wage Law, spoke about this at the City Paper forum, saying that the plaintiffs he represents in tip theft cases don’t look like or have the good restaurant jobs that the No On 77 crowd has.

“This will destroy my business.” I think there are a couple of reasons to be skeptical about this line of thought.

First is the best one: Restaurants are doing just fine in states where One Fair Wage already exists. Indeed, Seattle and San Francisco — good comps for DC — have some of the best food scenes in the U.S., and the restaurant biz is growing in One Fair Wage states.

Remember: The raises are going to be phased in over many years. Restaurants will have years to adapt.

The big challenge may be payroll taxes. The tipped minimum has been functioning effectively as a subsidy all these years. By substituting tips for payroll, employers of tipped workers keep their payroll taxes lower than any other kind of enterprise with a comparable number of employees.

Restaurants say that they will have to raise prices and lay off employees to make ends meet in this brave new world. These are the same claims that every opponent of raising the minimum wage — and worker protections, and environmental protections, et cetera — make. They have not been borne out by the empirical examples from One Fair Wage states.

Finally, I’ll add a note of tough love that is purely part of my own reasoning — I don’t mean that everyone should share it: Do we need another tapas restaurant, or do we need an easily-enforceable living wage? I doubt it’s really a choice that we need to make — see above — but I’m not sure about the social utility of a dining scene that already feels saturated to me.

Let’s consider the bigger picture.

There’s a reason a lot of the same people being hired to lobby against Initiative 77 have experience organizing against raising the minimum wage elsewhere: This is about building momentum for raising the minimum wage, and workers’ protections more broadly, nationwide. That’s why the National Restaurant Association is pouring money into defeating the measure.

Not everyone likes ballot initiatives. They are a blunt-force tool that rarely present voters with an easy decision. If the ballot measure fails, there might be compromises down the road. Andy Shallal thinks that’s the way to go.

But this is the choice we’ve been given.